Tea Party, ALEC Prescribe CPR to Kill Pensions

What do you call a proposal that breaks promises to city workers, destroys their families’ hard-earned retirement security, lowers the city’s tax base, harms our fragile economy, and actually requires the city of Cincinnati to pay out more in retiree funds?

The tiny group of wealthy financiers and Tea Party supporters sponsoring this proposal calls it “Cincinnatians for Pension Reform” (CPR). But unlike the medical procedure of the same name, this one would kill its patient.

Similar measures have been passed in Knoxville, Tennessee, and San Jose and San Diego, California, in the last two years. Attempts were made in Los Angeles and Tucson, but the measures in those cities were knocked off the ballot when opposition coalitions brought legal challenges. In each case, the measure’s wording comes from the American Legislative Exchange Council (ALEC), the group that generates “model bills” to rewrite state and local laws in a corporate-friendly fashion.

WHO IS BEHIND CPR?

If you said, “Cincinnatians would never push something this bad,” you are right on the money.

The 7,000 signatures filed last month to get the proposal on the November 5 ballot were gathered by out-of-town petitioners; a California company, Arno Petition Consultants, was paid nearly $70,000 to bring them in.

Paul Jacob of the Virginia-based Tea Party group Liberty Initiative Fund has put more than $81,000 into CPR thus far. The conservative California-based National Taxpayers Union has put in another $52,000. Liberty Initiative has funded similar anti-retiree measures in other cities.

To give an idea of the thinking behind CPR, Jacob has said that Social Security is “fraudulent,” “a Ponzi scheme,” and “a system based on swindle.”

So, on one side we have out-of-state financiers who want to kill Social Security, out-of-town petitioners paid by a California company, and the Tea Party. Who is on the other side?

Just about everyone else.

The opposition to CPR is both nonpartisan and bipartisan. The Faith Alliance, a coalition of many different churches and communities of faith, has taken a strong stand against CPR. Both major Cincinnati mayoral candidates oppose it, and the city council voted against it unanimously. Public and private unions and the Ohio Alliance for Retired Americans are working to defeat it.

WHY IS THERE A ‘CRISIS?’

CPR’s backers say greedy public workers, who are grabbing our public tax money so they can live high on the hog, caused a “crisis.” That’s why we need to break our promises of retirement security.

Economic experts, as well as regular people, disagree.

First of all, the economic crises of 2001 and 2008 created debt problems, not just for Cincinnati, but for every city in the U.S.

The last two state budgets made huge cuts to all Ohio cities. Years of giving tax abatements to businesses also badly hurt the city’s finances and undermined the public retirement system. Outsourcing of public services, like city golf courses and Fountain Square—our landmark downtown city square—has transferred jobs to non-public workers, who then do not pay into the city’s retirement system, while also undermining the tax base.

In the past, public and private pensions were required to be fully funded. Congress changed that during the Reagan administration, under the influence of corporations who argued that pension funds were “unproductive” and that if they could just be “freed up and used productively” pensions would be “more secure” and “better funded.” Cincinnati, like many other cities, used pension funds for other purposes, undermining city employees’ retirement.

While nobody likes taxes, sometimes—when a wide variety of pressures undercuts a city’s ability to function—tax levies might actually be needed. Whether that is the case in Cincinnati’s situation or not, politicians’ fetish to never, ever consider those options and to immediately attack anyone who might raise the idea made it impossible to even talk about strengthening our city’s tax base.

Cincinnatians know that our budget problems and city pension problems are real. We need to find ways to resolve our problems, but CPR would make the situation much worse.

WHAT WOULD CPR DO?

This proposal, if passed, would do many things. None of them, however, includes “saving the city from bankruptcy.”

First and foremost, newly hired city workers would no longer have pensions, and current workers would see their pensions cut. New workers would be thrown onto the tender mercies of the stock market. Anyone who had their retirement funds in a 401(k) when the economy nosedived knows what that means. A recent study by the Employee Benefits Research Institute and the Investment Company Institute found that U.S. workers with 401(k)s lost on average 24.3 percent of their invested funds in 2008.

If CPR passes, the city would be required to start paying into Social Security for its workers: 6.2 percent of salaries, far higher than the 1.8 percent it currently pays into the city retirement system. In other words, taxpayers would see a massive increase, not a savings, in city expenditures.

City workers would lose the disability retirement benefits and death benefits they now have.

And by closing the city’s retirement plan, Cincinnati would have to cover its $862 million debt in the next 10 years instead of the current 30 years, a terrible new burden on the city.

All of the above means far less retirement security; more, not less, city debt; and multiple blows to our economy, forcing more people onto public aid—again, harming, not helping, the city.

The Ohio Federation of Labor and its affiliated Ohio Alliance for Retired Americans have organized retirees who know the ground they’re on, and they are using innovative ways to get the message out. Bentley Davis, coordinator for the Ohio Alliance for Retired Americans, says the language to change Cincinnati’s charter is so extreme that even the Chamber of Commerce and the conservative Cincinnati Inquirer have come out against it.